Willie Walsh, the head of British Airways’ owner, IAG, has taken a hard line on what he described as ‘weak airlines’.
Speaking during a session at the CAPA Airlines in Transition 2013 conference in County Wicklow, Ireland, Walsh said that failing airlines should not receive state aid, but should be allowed to go under. His comments were aimed at European carriers that receive state aid from their governments, while Walsh believes that any lost capacity from their failure would soon be taken up by other carriers, assuming that there was a perceived demand. He singled out Malev, a Hungarian Carrier, and Spanair that operated out of Spain to justify his argument against state intervention.
He said, ‘State aid has gone to carriers in the past which has allowed them to continue for a while before eventually failing. The weak do not have the right to stay. They should be allowed to disappear – that’s what regulators should allow to happen. If you look at the capacity from Spanair, that was replaced overnight by other carriers. With Malev, around 60 percent of capacity was replaced. Governments have been concerned in the past about losing access if an airline went under, but those days are over now. If there is demand then the capacity will be replaced.’
Walsh also criticised the practice of failing airlines joining major alliances as a means of solving their financial problems. Commenting on this he said, ‘Alliances will not guarantee your success. You have to have a robust business yourself and be profitable in your own right. Joining an alliance will only complement or supplement that business.
‘Anybody who thinks the answer to their financial problems is to enter an alliance, they are fooling themselves.’